NDS accused of aiding piracy against ITV


News CorporationMore trouble for News Corp.: NDS, a conditional access software developer acquired by News Corporation in 1992, has been accused of employing a computer hacker to sabotage Sky TV’s biggest rival ITV Digital in the UK—that is until ITV folded in 2002. The BBC reports NDS may have leaked information from ITV which could be used to create counterfeit smart cards, giving people free access to paid TV. The widespread availability of codes to reproduce the cards meant ITV Digital’s services could be accessed for free by many viewers—or pirates—once they used them.

Of course, the $5 billion purchase of this month of NDS Group by Cisco Systems will change News. Corp.’s liablity here, since it happened during News Corp.’s ownership.

The claims have been made by Lee Gibling – who set up a website in the late 90s known as The House of Ill-Compute, or Thoic. Gibling told the BBC he was paid to publish stolen info. His contact at NDS was Ray Adams, who at the time was head of UK security for the firm – which makes smartcards for all News Corporations’ pay-TV companies globally. As it happens, News Corp. and its partner recently cut a deal to sell NDS to Cisco Systems for $5 billion.

NDS has denied Gibling’s claims and said Thoic was only used to gather intelligence on hackers.

ITV Digital was first launched as On Digital and was set up as a rival to News Corporation’s Sky TV in 1998. When ITV folded, Sky TV was the UK’s only pay network.

The NDS response to BBC Panorama:

“NDS is a global leader in the fight against pay-TV piracy, having repeatedly and successfully assisted law enforcement in that important effort.

Like most companies in the conditional access industry – and many law enforcement agencies – NDS uses industry contacts to track and catch both hackers and pirates. This is neither illegal nor unethical. And, to ensure that all activity remains completely within legal bounds, NDS staff and their contacts operate under a clear code of conduct for operating undercover.

These allegations were the subject of a long-running court case in the United States. This concluded with NDS being totally vindicated and its accuser having to pay almost $19m in costs.”

It is simply not true that NDS used the Thoic website to sabotage the commercial interests of ONDigital/ITV digital or indeed any rival.

As part of the fight against pay-TV piracy, all companies in the conditional access industry – and many law enforcement agencies – come to possess codes that could enable hackers to access services for free. It is wrong to claim NDS has ever been in possession of any codes for the purpose of promoting hacking or piracy.”

ITV Digital’s former CTO, Simon Dore, told BBC’s Panorama program that piracy was “the killer blow for the business, there is no question. The business had its issues aside from the piracy… but those issues I believe would have been solvable by careful and good management. The real killer, the hole beneath the water line, was the piracy. We couldn’t recover from that.”

Gibling told Panorama that codes on the Thoic site originated from NDS: “They delivered the actual software to be able to do this, with prior instructions that it should go to the widest possible community.”

Two former senior policemen ran the NDS UK security unit. Adams had been head of criminal intelligence at the Metropolitan Police and Len Withall, who had been a chief inspector. Both men were secretly filmed by Panorama.

Adams claimed he “would have arrested” Gibling if he had known ITV Digital’s code had been published on Thoic and denied having the codes himself. But internal NDS documents, obtained by Panorama, show a hacked code was passed to Withall and Adams from a tech expert inside the company. Gibling said NDS paid for Thoic’s servers and was across all of its hacking and TV piracy.

“Everything that was in the closed area of Thoic was totally accessed by any of the NDS representatives,” he said.

He added that although Thoic was in his name, in reality the website belonged to NDS.

There is no evidence that James Murdoch knew about the events reported by Panorama.

Once ITV Digital’s codes were published on Thoic, Gibling said his site was then used to defeat the electronic countermeasures that the company used to try to stop the piracy.

He added that new codes created by ITV Digital were sent out to other piracy websites.

NDS’s UK security unit was 50% funded by Sky. But the satellite broadcaster, chaired by James Murdoch, told Panorama it had no involvement in how the unit was run and was not aware of Thoic. Murdoch was a non-executive director of NDS at the time although there is no evidence that he knew about the events reported by Panorama.

Ofcom, the UK’s FCC, is currently examining whether Murdoch and News Corp. are “fit and proper” persons to be in control of BSkyB, the company that runs Sky TV. News Corporation currently owns 39% of BSkyB.

Tom Watson, a member of the Parliament’s Culture, Media and Sport Select Committee that has been examining the phone-hacking scandal, has called for Ofcom to examine these new allegations in their assessment: “Clearly allegations of TV hacking are far more serious than phone hacking,” he said. “It seems inconceivable that they (Ofcom) would not want to look at these new allegations. Ofcom are now applying the fit and proper person test to Rupert and James Murdoch. It also seems inconceivable to me that if these allegations are true that Rupert Murdoch and James Murdoch will pass that test.”

RBR-TVBR observation: Seems News Corp. keeps finding itself under fire in the UK. And this allegation cuts more to the core of News Corp.’s assets—television. Ofcom seems all too happy to add this to the ongoing investigations. NDS is a global company with offices in the US. Hopefully, none of these claims will spread to U.S.—it sounds like an isolated incident. FYI, back in 2007, NDS developed and tested NDS RadioGuard conditional access for HD Radio with companies like Harris, BE and Nautel. NDS provides the software for the conditional access chip. HD Radio’s iTunes Tagging is one example of iBiquity’s conditional access currently in use.